31/07/2013 – The Global Forum on Transparency and Exchange of Information for Tax Purposes has released peer review reports assessing the tax systems of 13 jurisdictions for information exchange. Later this year, most of these reviews will feed into the ratings assigned to 50 jurisdictions, backing G20 and Global Forum efforts to strengthen tax cooperation and stamp out cross-border tax evasion.

The new reports cover key players in a move toward greater tax co-operation. The 11 “Phase 2” reports review the exchange of information in practice in Austria, Bermuda, Brazil, British Virgin Islands, India, Luxembourg , Malta, Monaco, Qatar, San Marino and The Bahamas. The two “Phase 1” reports look at the legal and regulatory framework for transparency and exchange of information in Israel and Lithuania. All the reports assess the jurisdictions’ commitment to the international standard for tax information exchange.

To date, the Global Forum has reviewed 98 jurisdictions. The 50 jurisdictions to be assigned ratings in November will include a further 9 Phase 2 reports expected to be adopted at that time. Each jurisdiction will receive ratings for the individual elements of the international standard and an overall rating - “compliant,” “largely compliant,” “partially compliant” or “non-compliant”.

Welcoming the reports,the Chair of the Global Forum, Kosie Louw of the South African Revenue Service, said: “The Global Forum is applying pressure on all jurisdictions to implement the standard and co-operate effectively in tax information exchange. The publication of the ratings later this year will be a crucial moment for all those committed to fighting cross-border tax evasion”.

Israel: The legal and regulatory framework in Israel generally ensures that ownership, accounting and banking information is available for all relevant entities and arrangements. However, in a limited number of cases, where a company has issued bearer shares, the owners of these shares may not be identifiable. The Israeli tax administration has broad access powers to obtain requested information for exchange of information purposes under Double Taxation Agreements, including from banks. However, ownership and accounting information may not be available and accessible in respect of certain trusts and new immigrants or returning veterans. Israel has a considerable network of double tax conventions that provide for exchange of information in tax matters. Nevertheless, the Israeli competent authority does not have access powers to give effect to agreements which cover only exchange of information (as distinct from double taxation). Israel’s response to the findings of this report as well as the practical implementation of the international standard will be considered in the Phase 2 review, which is scheduled to commence in the second half of 2013. http://www.eoi-tax.org/jurisdictions/IL

Lithuania: Lithuania’s Phase 1 review notes the county’s high level of commitment to the international standard for transparency and exchange of information for tax purposes. Its legal framework generally ensures that ownership, accounting and bank information is available. Lithuania has a wide network of exchange of information mechanisms including bilateral agreements, the Multilateral Convention, and EU mechanisms. Its competent authority has broad powers to obtain the information necessary to comply with requests from any of its partner jurisdictions. Lithuania’s response to the recommendations in this report, as well as the application of the legal framework to the practices of its competent authority, will be considered in detail in the Phase 2 Peer Review of Lithuania. http://www.eoi-tax.org/jurisdictions/LT

Reports on the implementation of the standard in practice (Phase 2)

Austria: Since its Phase 1 review in 2011, Austria has made some progress on the recommendations. It has negotiated a number of new EOI agreements and is now in a position to exchange information in accordance with the international standard with 40 of its 92 treaty partners. However, as a number of treaties have not yet been ratified, the Phase 2 review raises some concerns with regard to the exchange of banking information. Austria has nevertheless been providing information to its EOI partners promptly, with 71% of requests answered in less than 90 days. The human and technical resources are sufficient for effective exchange of information and overall its treaty partners are content with the practices of the Austrian tax administration. http://www.eoi-tax.org/jurisdictions/AT

Bermuda: The Phase 2 review shows that Bermuda’s exchange of information practice is in line with the international standard for transparency and exchange of information for tax purposes. Although Bermuda’s practical experience of exchanging information with a number of EOI partners is relatively new and limited, the procedure for such exchange follows one that is long established. Bermuda’s practices to date have also demonstrated a responsive approach, and information has been available in all cases where it has been requested. However, the lack of monitoring of obligations to keep ownership and accounting information may affect the availability of such information. Finally, the Phase 2 report notes that Bermuda has enhanced its legal framework in respect of the availability of ownership and accounting information.http://www.eoi-tax.org/jurisdictions/BM

Brazil: The Phase 2 review demonstrates that Brazil’s exchange of information practice is in line with the international standard for transparency and exchange of information for tax purposes. Brazil’s legal framework and its practical implementation ensure that ownership, accounting and bank information is available and tax authorities have access powers to obtain the requested information. In some instances the competent authority has been unable to answer all requests in a timely manner due to a lack of resources and insufficient monitoring of timeframes for obtaining and providing information. Nevertheless, Brazil is viewed by its peers as a reliable and cooperative EOI partner. http://www.eoi-tax.org/jurisdictions/BR

India: The Phase 2 review shows that India’s exchange of information practice is in line with the international standard for transparency and exchange of information for tax purposes. India’s legal framework and its practical implementation ensure that ownership, accounting and bank information is available and accessible by the tax administration in line with the standard. India now has in place appropriate organisational processes and resources to ensure effective exchange of information and greatly improvedthe timeliness of responses during 2011 and 2012. India is considered by its treaty partners a very important and fully committed partner with long experience in exchange of information. http://www.eoi-tax.org/jurisdictions/IN

Luxembourg: The Phase 2 review shows that Luxembourg’s exchange of information practices during the review period were not fully in line with the standard. While its legal and regulatory framework provides for the availability of ownership, accounting and bank information, Luxembourg has not used its information gathering and enforcement powers to obtain requested information in all instances. Despite these deficiencies, Luxembourg does exchange a considerable amount of information and does so in a timely manner. http://www.eoi-tax.org/jurisdictions/LU

Malta: The Phase 2 review shows that Malta’s practices are in line with the international standard of transparency and exchange of information for tax purposes. Malta’s legal framework ensures that ownership, accounting and bank information is available according to the standard. However, as new legislation establishing comprehensive requirements on the availability of ownership and accounting information has been recently introduced, Malta should monitor its practical implementation. The Maltese competent authority has direct access to databases from which most requested information can be retrieved, as well as broad access powers to collect further information requested for exchange of information purposes. Malta’s network of exchange of information mechanisms covers more than 90 jurisdictions, includingall its relevant partners. Feedback from its exchange of information partners attests to the high quality responses provided by Malta in a timely manner, in particular since the introduction of internal administrative guidance to streamline the process and shorten response times. http://www.eoi-tax.org/jurisdictions/MT

Monaco: The Phase 2 review shows that Monaco’s exchange of information practices are in line with the international standard for transparency and exchange of information for tax purposes. Monaco’s legal framework and its practical implementation ensure that ownership, accounting and bank information is available and tax authorities have the required access powers to obtain the requested information. Monaco should nevertheless introduce exceptions to the prior notification process for requests received from jurisdictions other than France (with which it has long-established EOI arrangements). Inputs received from Monaco’s exchange of information partners attest to the high quality of responses provided by the Monegasque authorities in a swift and timely manner. http://www.eoi-tax.org/jurisdictions/MC

Qatar: As it has received very few EOI requests, the Phase 2 review notes that Qatar has very limited experience in exchanging information for tax purposes. Nevertheless, the country has detailed procedural guidelines which appear to be adequate to effectively obtain and exchange information. Qatar also has the legal and practical framework in place to ensure that ownership, accounting and bank information are available in practice. Qatar should monitor its EOI practices, in particular taking account of any significant changes to the volume of incoming EOI requests. http://www.eoi-tax.org/jurisdictions/QA

San Marino: The Phase 2 review finds that San Marino has generally implemented the standard of transparency and exchange of information. In recent years, San Marino has made much effort to fully cooperate in tax matters and has signed EOI agreements with 44 jurisdictions, including its major partners. All relevant information is generally available in San Marino, and this is effectively enforced by by the authorities. Nevertheless, San Marino should monitor the application of enforcement measures. The competent authority is well organised and has the necessary powers to obtain and exchange information. When requested, the competent authority has been able to provide the information in a timely manner. As the number of requests may increase in the coming years, San Marino should monitor its processes and resources . http://www.eoi-tax.org/jurisdictions/SM

The Bahamas: The Phase 2 review notes that although The Bahamas started receiving requests for information relatively recently, the authorities were often able to provide the information and responded fully to 75% of the requests within 180 days. Whilst ownership and accounting information was generally made available, the lack of monitoring of ownership and accounting obligations may affect the availability of information for all legal entities. The Bahamas has broad powers to gather relevant information and these have been successfully exercised to gather information for EOI purposes. The competent authority is well organised with adequate internal processes in place for handling EOI requests. This has been confirmed by its partners acknowledging The Bahamas as an important and reliable EOI partner. http://www.eoi-tax.org/jurisdictions/BS

Virgin Islands (British): The Phase 2 review shows that the Virgin Islands experienced some difficulties obtaining and exchanging information for tax purposes during the three-year review period from 1 July 2009 – 30 June 2012. Its exchange of information partners indicated that in a significant proportion of cases the responses to EOI requests were incomplete. This was largely because no clear organisational process was in place, resulting in the Virgin Islands not using its access powers effectively. In particular accounting information was not obtained or exchanged in many cases. A reorganisation of the Virgin Islands competent authority has taken place since the end of the review period.The Phase 2 report notes that the Virgin Islands has enhanced its legal framework in respect of the availability of ownership and accounting information.http://www.eoi-tax.org/jurisdictions/VG